As we discussed last week, the maturity walls don’t sit still either. They act like sand waves marching towards the beach, propelled by the tidal forces of refinanced loans. What looks like imposing cliffs, eventually smooth out over time, eroded by the steady flow of capital into leveraged lending. We predict that the dynamics driving […]
As rates climbed, repricings slowed. 2023’s volume jumped to $81.3 billion from only $10 billion the year before – a far cry from 2021’s $240 billion, per PitchBook. Today less than 10% of all leveraged loans represent net new issuance, the lowest level since the GFC. Overall refinancings – amendments, extensions, acquisitions – were the […]
In the absence of fully functioning public markets during the Fed’s intense anti-inflation campaign, liquidity was drained, not just from the economy but from bank reserves, trading desks, CLO formation and retail fund flows. Top middle market arrangers have built powerful one-stop platforms, allowing private equity sponsors to select from a wide range of sophisticated […]
“Flight to quality” was a key theme for investors in 2023 given overall market uncertainty. Prioritizing high quality assets should always be a focus, irrespective of economic conditions. In 2024, if overall market M&A volume picks back up as expected, we believe that these winners should be very well-positioned for sustained growth… (Any “forward-looking” information […]
As we navigate slowing economic growth, volatility, and geopolitical shocks, it is even more critical to identify the attributes of winners and losers. Embracing scale, cultivating diverse capabilities, leading with true sourcing advantages, exercising valuation discipline, and maintaining conservative and flexible balance sheet structures – will prove to be a brighter path for success in […]
The US economy continues to roll along. December’s labor report showed 261,000 new jobs, a vigorous uptick from the 173,000 number in November. Market observers took this as a sign that the Fed’s projected three rate cuts for 2024 may be more back-ended. Quantitative tightening, which has been draining liquidity from the financial system, may also be […]
2023 was characterized by several key themes in the capital markets. The Fed’s battle against inflation, the resulting impact on issuers of higher for-longer interest rates, a much slower M&A pace as buyers and sellers deal with mounting borrowing costs and compressed equity returns, and the steady disintermediation of buyout financings from public to private […]
In the capital markets this year, it’s all been about rates and inflation: can the Fed’s higher-for-longer regime bring prices down close to pre-pandemic levels without triggering a recession? At the moment, the answer seems to be yes. Both credit investors and issuers are using private capital as a vehicle proven resilient through rate, economic, […]
Why is private credit getting called out for potential bubbles and systemic risk when banks have been the ones failing? We posed that question to Van Hesser, the chief strategist for KBRA. Mr. Hesser produces a weekly podcast, “Three Things in Credit.” His October 27th conversation about private credit, capital markets and the economy caught […]
The confusion around differences between public and private credit dynamics has been compounded by the rapid growth of the illiquid asset class. The middle market was infrequently on investors’ radars until it began to rival broadly syndicated loans and high-yield bonds in size. At $1.5 trillion, private credit has caught up with both, and by […]